It’s been nearly two years since a pair of tragedies hit Malaysia Airlines, which was already bleeding money. The two disappearances of its MH370 and MH17 led an already badly-performing company to the brink of financial collapse. It’s only now, two years later, that the airline reported its first month of profit since before the crash and the stock’s delisting.
Many aviation analysts feel that Malaysia Airlines was poorly managed for years. The situation was made worse by the two downed planes, resulting in negative international publicity. To this day, most people still remember the accidents and if one were to post on social media that they were taking a Malaysia Airlines flight, a reply along the lines of “you’re brave” would probably follow.
Malaysia Airlines’ Turnaround CEO
The long years of poor management saw the beginning of its end when Christoph Mueller took the helm of the aviation company in 2015 with the goal of turning it around, as he had previously done with Aer Lingus. Mueller acknowledged that the “disasters” hurt the airline’s reputation but saw that the root causes were unsustainable routes, high operating costs, and outdated information systems.
Known as one of the most effective turnaround CEOs in the industry, Mueller took control and made a series of calls that the previous management were unwilling to make. These included the layoff of over 6,000 people (30% of the entire workforce) and retiring a large part of their fleet. Retiring all Boeing 777s was a large part of the turnaround strategy. This was not only because the model is associated with the two disasters, but also because it was one of the least fuel efficient planes the company had.
According to Mueller, the justification for shrinking the size of the business was that if an unprofitable airline is growing, it just meant that its losses are growing. He knew right away that expansion could only happen once Malaysia Airlines was growing again.
A Better Quality Airline
Mueller not only decided to shrink the business down to certain routes, but also to improve what’s left of the airline. To offer better services in-flight, he implemented a few changes such as the addition of a new business class with beds, new menus, in-flight WiFi, and refurbished airport lounges. In order to provide the same quality of service across flights and to cut costs, the number of suppliers was reduced by more than 75% as well.
The CEO realized that Malaysia Airline’s safety reputation depended on both the airline’s future operations, and also how the airline dealt with past events. But admitting a lack of knowledge about what happened to its flights would have had a negative effect on the company. Mueller increased the efforts for the search in an attempt to improve the company’s reputation, even though reports showed that their efforts in the southern Indian Ocean were in vain.
Malaysia Airlines has seen a speck of light after years of darkness in its spiral of financial performance. With the leadership of its newly appointed CEO, the company hopes to keep its performance going and aims to break even by 2018.
Mueller announced that he will leave Malaysia Airlines in September due to personal reasons. Nonetheless, he stated the company is back on track.
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